Bills 61 And 62 Tabled In The Québec National Assembly: Substantive Changes To Legislation Applicable To Major Public Infrastructure Projects In Québec

On May 9, 2024, Ministers Geneviève Guilbault, Minister of Transport and Sustainable Mobility, and Jonatan Julien, Minister responsible for Infrastructure and Minister responsible for the Capitale-Nationale region, tabled two important bills that would substantially change the law in Québec regarding the procurement and awarding of contracts for major public infrastructure projects. Minister Guilbault tabled Bill-61, Loi édictant la Loi sur Mobilité Infra Québec et modifiant certaines dispositions relatives au transport collectif¹ ("Bill-61"), while Minister Julien tabled Bill-62, Loi visant principalement à diversifier les stratégies d'acquisition des organismes publics et à leur offrir d'avantage d'agilité dans la réalisation de leurs projets d'infrastructure² ("Bill-62"). These two bills are likely to have a major impact on the procurement processes of complex institutional building and transportation infrastructure projects.

1. Main changes in Bill-61 and Bill-62

The main changes contemplated by Bill-61 are the following:

• The creation of Mobilité Infra Québec, a new legal person that will be a mandatary of the state and subject to the Act respecting the governance of state-owned enterprises³;
• The main mission of this new entity would be to carry out opportunity analysis, planning and implementation of complex transportation projects when the government entrusts it with such responsibility⁴;
• Such projects would cover the various following areas: (i) the construction, reconstruction or repair of a building or civil engineering work intended for transportation or useful to a transportation system; and (ii) the development or improvement of an intelligent transportation system⁵;
• Mobilité Infra Québec would have exclusive jurisdiction⁶ and wide powers in the planning or implementation of complex transportation projects that the government could entrust to it⁷;
• Mobilité Infra Québec could establish partnerships, through any subsidiary, for the planning and execution of complex transportation projects, provided that it has control of the subsidiary⁸. This subsidiary would have the same powers and obligations as Mobilité Infra Québec⁹;
• Unless otherwise agreed, Mobilité Infra Québec would not be responsible for maintaining an asset or operating a transportation infrastructure¹⁰.

The main changes contemplated by Bill-62 for major public infrastructure projects are as follows:

• The introduction of a new type of contract, known as a "Partnership Contract," in the Act respecting contracting by public bodies¹¹ (the "Act");
• A Partnership Contract is any contract for the implementation of a public infrastructure project under which a public body¹² delegates to a private partner the responsibility for the design and construction of the infrastructure, as well as any other responsibilities felt appropriate, including financing, operation or maintenance features¹³, and obligatorily involving a collaborative approach¹⁴;
• The collaborative approach would be specified by a Treasury Board regulation, at a later date, and could include bilateral workshops, pooling of resources and information related to the infrastructure project, and consensual sharing of risks and, where appropriate, of savings generated or profits made, and losses incurred during the term of the contract¹⁵;
• Any contract for the construction of public infrastructure using an alternate mode or collaborative approach, as described in section 2 of this article, could thus be described as a "Partnership Contract.¹⁶" For the implementation of these alternate mode or collaborative contracts (or Partnership Contracts), the public bodies involved would now have available the same flexibilities as offered under public-private partnership contract rules. Accordingly, the public bodies would have discretion in establishing the criteria and terms of their public calls for tenders to include a collaborative approach allowing them to offer the best value for the realization of their infrastructure project¹⁷;
• At the same time, Bill-62 introduces various legislative changes to allow the implementation of these Partnership Contracts¹⁸.

The legislative changes envisaged by these bills are part of the Quebec Infrastructure Plan and go hand in hand with those introduced in Bill-51 to modernize the construction industry¹⁹ tabled in winter 2024 and currently under study²⁰.

2. Contract awarding models in Québec

Since the emergence of alternative project delivery models in Canada, including Québec, in the early 2000s, delivery models have become more sophisticated, depending on the project. The more comprehensive approach of design-build-finance-operate-maintain ("DBFOM" or "PPP") projects has given way in many circumstances to alternative design-build ("DB") or design-build-finance ("DBF") projects, to which operations and maintenance components can be incorporated.

For its part, the Québec government has, in recent years, notably through the Ministère des Transports et de la Mobilité durable and the Société québécoise des infrastructures, experimented with various types of so-called "alternate" model contracts, such as DB and DBF contracts, with a view to filling certain gaps in the so-called "conventional" model. Now, the trend in the North American market is to develop the "collaborative" or "partnership" models for certain complex projects involving higher risks. In order to fully understand the proposed changes to the Act and other legislations, it is important to detail the nuances and distinctions between the different types of contracts, namely:

• "Conventional" Model:
  • In this type of contract, the public body prepares a complete design as well as final plans and specifications, and proceeds with a competitive procurement process. The purpose of the latter process is to award a fixed-price contract to the lowest compliant bidder.
  • The contractor submits a lump-sum price and performs the work in accordance with the public body's specifications and design.
  • This model is relatively rigid, and any deviation from the specifications or bidding documents could lead to a claim or dispute.
• "Alternate" Models:
  • These contracts usually include the construction, design and sometimes, the financing, operation and maintenance of the infrastructure (notably DB, DBF, DBFOM, etc.).
  • These models allow the public authority to prepare a preliminary design in the form of detailed technical specifications, which are completed at 20 to 50 per cent, for a procurement process. The private partners and the public authority then jointly pursue the design to 100 per cent completion and proceed with the sequencing of the work, schedule management and construction.
  • These models are more advantageous for projects where certain parameters are unknown, and where risk sharing is desired by the public body.
• "Collaborative" or "Partnership" Models:
  • In this type of contract, the approach is very different, in that the public body selects a project team (professionals and builders) with whom it will participate in the design and development of the solution. This type of contract is known as an "Integrated Project Delivery" ("IPD") contract.
  • It is not just about hiring a contractor to do the work but about designing and building in collaboration with the parties involved.
  • These models typically include a waiver of any recourse or claim by the parties and the establishment of a target price for the completion of the project. These projects are also typically conducted on an "open book" basis, and contractors are required to disclose financial information related to the project to the public authority.
  • The purpose of these models is to address problems or additional risks during the project in a collaborative or partnership manner.

It is important to note that all of these models should be seen as tools that can be used and adapted with any specific project. For example, alternate and partnership models are typically used for more complex projects and risks that are less well defined or difficult to identify.

3. The limitations of certain models

Since the mid-2000s, a number of major road projects have been carried out using these alternative models, including the construction of Highway 25 and Highway 30 (both DBFOMs, including tolling), the reconstruction of the Turcot interchange and the Île-d'Orléans bridge (both DBs), and the refurbishment of the Louis-Hippolyte-La Fontaine tunnel and reconstruction of the Île-aux-Tourtes bridge (both DBFs). The Société québécoise des infrastructures has also carried out similar pilot projects, notably for high schools, hospitals, detention centres, maintenance centres and retirement homes.

Reasons for this evolution in the various project procurement models include, for example, the large scale or complexity of certain major transportation, or technical or financing difficulties applicable to certain specific projects. These various factors explain why consortiums favour projects of reasonable size, with greater risk-sharing.

However, government representatives have indicated that some of these models have limitations or do not achieve the desired objectives, particularly in terms of competitiveness, cost and schedule. The government's objective with Bill-61 and Bill-62 is therefore to try to limit cost overruns, speed up project completion, increase the attractiveness of major projects in Quebec and improve the competitiveness of the bidding process. The approach proposed by the Minister of Transport and Sustainable Mobility and the Minister of Infrastructure, by the creation of a transportation agency called Mobilité Infra Québec and the diversification of procurement strategies for public authorities and their greater flexibility, is part of an overall attempt to achieve these objectives.

Bill-61 and Bill-62 have now been tabled in the National Assembly and will require detailed study in parliamentary commission before possibly, their adoption by the National Assembly. We will keep you updated on the progress of these bills in the coming months.

Footnotes

1. Could be translated as : An Act to enact the Act respecting Mobilité Infra Québec and to amend certain provisions respecting public transit

2. Could be translated as : Act to diversify the procurement strategies of public bodies and provide them with greater agility in carrying out their infrastructure projects.

3. An Act to enact the Act respecting Mobilité Infra Québec and to amend certain provisions respecting public transit, Bill no.^o 61 (introduced May 9, 2024), 1^st sess., 43^rd legis. (Qc), ss. 1, 68.

4. Id, art. 4 (1).

5. Id, art. 4 (4).

6. Id, art. 6.

7. These powers include :

• the possibility of developing areas near buildings or civil engineering structures for a complex transport project by allowing it to sell a property (or part thereof) or to allow a third party to build on a property. See: art. 4 al. 2, Bill-61.
• the right to acquire, either by mutual agreement or by expropriation, any property it deems necessary for the project. See: art. 8, Bill-61;
• the right to acquire or incorporate, with government authorization, a subsidiary. See: art. 9, Bill-61;
• the ability to perform all the acts and exercise all the rights of an owner, even if it is not. See: art. 24, Bill-61.

8. Control is exercised either by having 50% of the voting rights of a corporation, 50% of the participation of a general partnership or by having control of the general partner of a limited partnership, as applicable. See art. 10, Bill-61.

9. Id, art. 9.

10. Id, art. 25.

11. CQLR, c. C-65.1.

12. In this case, the Ministère des Transports, the Société québécoise des infrastructures or any other public body authorized by the minister responsible for the latter. See art. 4 (2) and (3) of Bill-62.

13. An Act to diversify the procurement strategies of public bodies and provide them with greater agility in carrying out their infrastructure projects, Bill no.^o 62 (introduced May 9, 2024), 1^st sess., 43^rd legis. (Qc), art. 1.

14. Id, art. 1.

15. Id, art. 1.

16. Id, art. 1.

17. Id, art. 4 (1), 18.

• 18. Among other things, these relaxations are aimed at :The possibility for the public body to negotiate with one or more bidders. See: art. 7, Bill-62.
• Postponement of the time required to authorization to contract from the Autorité des marchés publics. See art. 9, Bill-62.

19. An Act to modernize the construction industry, Bill no.^o 51 (detailed study - May 8, 2024) 1^st sess., 43^rd legis. (Qc).

"Projet de loi no 51 visant à moderniser l'industrie de la construction : mesures clés pour les projets d'infrastructure", Gowling WLG, February 5, 2024, online.

Read the original article on GowlingWLG.com

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